Perot v. GM
H. Ross Perot is 56 years old and is worth over $2 billion. He started EDS, his data processing company in Texas, 25 years ago with $5000, sold it to General Motors in 1984 for $2.5 billion and continued to run EDS as a wholly owned subsidiary.
Last December, after privately and publically criticizing the giant auto maker for its stifling bureaucracy and for technologically being “five years behind the refrigerator,” Perot negotiated his departure from the GM Board of Directors by selling his GM shares to GM for $742 million.
In the purchase-severance agreement, Perot and GM entered into a hush pact that precluded any public criticism for each other. Any dispute over what was meant by “criticism” would be decided by a panel of three arbitrators who could penalize the violator up to $7.5 million. This prohibition led to Perot replying to a question by an EDS associate that the $742 million was “hushmail”, not “greenmail.”
Since December, Perot has uttered some less than praiseworthy words about GM and so has GM boss, Roger Smith tossed a few unflattering phrases toward Perot. These exchanges have not been sufficiently lengthy to lead either party to call in the arbitrators. In the meantime, Perot has hardly lost an opportunity in his public speeches to castigate the lack of leadership at the top of giant business (and politics, one should add) in this country.
He clearly has a lot to say about the failure of GM management from their product lemons to their labor relations. He saw much of it on the inside and at the top of the GM pyramid. He saw how GM stumbled in trying to get its automated plants to work. Many people are hungry to hear what he has to say and so is the media.
So, I have a suggestion for Mr. Perot. Announce that he will give “the $7.5 million speech” about General Motors, Roger Smith and company at Madison Square Garden with full television, radio and print media access. Twenty thousand seats will go on sale at $100 each. The receipts would go to a special educational fund to encourage departed or retired corporate executives to give their one and only candid finale speech on their business experiences.
Chief Executive Officers of banks, steel companies, oil companies, insurance firms and other big businesses have a lot to say. I know this from my conversations with many of them after they have retired. The Perot Fund will provide the stimulus and the forum for them to convey their wisdom and insight when they are free — free at last — from the invisible chains of corporatedom:
All those three-piece-suited yuppie and not so yuppie business types from Wall Street and Madison Avenue will rush to get their tickets. The excitement and suspense building to the Big Speech will assure a full house. They will come not just to see a show of substance, but to see the beginnings of a tradition featuring business executives speaking out for the long suppressed truth about corporatist practices that have led the U.S. economy down the path of deterioration, chronic unemployment, pollution, consumer fraud, taxpayer subsidies and undue political influence.
Will Perot have to pay $7.5 million in fact? Well, that will depend on whether such a hush deal is enforeceable. If it is, the arbitrators must decide how much criticism of GM is worth how much of the $7.5 million. GM may be foolish enough to be drawn into this wrangle which will intensify the spotlight of the workings of its mired upper bureaucracy and the need for new executive leadership.
For a man prone to combine drama with substance in his career, the Madison Square Garden performance would add the power of example through the reach of the mass media. How about it, Mr. Perot? How about the speech that will be heard around the world of business